Correlation Between Transocean and LOCKHEED

Can any of the company-specific risk be diversified away by investing in both Transocean and LOCKHEED at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Transocean and LOCKHEED into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Transocean and LOCKHEED MARTIN P, you can compare the effects of market volatilities on Transocean and LOCKHEED and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Transocean with a short position of LOCKHEED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transocean and LOCKHEED.

Diversification Opportunities for Transocean and LOCKHEED

-0.09

Correlation Coefficient

Transocean  LOCKHEED

Good diversification

The 3 months correlation between Transocean and LOCKHEED is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and LOCKHEED MARTIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOCKHEED MARTIN P and Transocean is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Transocean are associated (or correlated) with LOCKHEED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOCKHEED MARTIN P has no effect on the direction of Transocean i.e., Transocean and LOCKHEED go up and down completely randomly.

Pair Corralation between Transocean and LOCKHEED

Considering the 90-day investment horizon Transocean is expected to generate 2.52 times more return on investment than LOCKHEED. However, Transocean is 2.52 times more volatile than LOCKHEED MARTIN P. It trades about -0.06 of its potential returns per unit of risk. LOCKHEED MARTIN P is currently generating about -0.18 per unit of risk. If you would invest  444.00  in Transocean on September 14, 2024 and sell it today you would lose (56.00) from holding Transocean or give up 12.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.63%
Values	Daily Returns

Transocean  vs.  LOCKHEED MARTIN P

Transocean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transocean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

LOCKHEED MARTIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOCKHEED MARTIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for LOCKHEED MARTIN P investors.

Pair Trading with Transocean and LOCKHEED

The main advantage of trading using opposite Transocean and LOCKHEED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean position performs unexpectedly, LOCKHEED can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LOCKHEED will offset losses from the drop in LOCKHEED's long position.

The idea behind Transocean and LOCKHEED MARTIN P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.